Supreme Court Overturns EPA Limits on Power Plants

On June 29, the United States Supreme Court nixed the United States Environmental Protection Agency’s 2012 Mercury and Air Toxics Standard, limiting emissions of mercury and other pollutants from power plants. The challengers argued that the $9.6 billion cost of complying with the standard outweighed the benefit of its application, and that EPA impermissibly failed to consider cost in deciding whether to regulate toxic emissions from power plants.

The Supreme Court held that EPA abused its discretion by ignoring cost, even under the deferential standard established in Chevron USA Inc. v. Natural Resources Defense Council, Inc. The Court held that in directing EPA to regulate power plants if it “finds such regulation is appropriate and necessary,” Section 112 of the Clean Air Act requires “at least some attention to cost.” Writing for the majority, Justice Scalia said, “One would not say that it is even rational, never mind ‘appropriate,’ to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits.”

EPA argued that it is not required to consider cost in the initial decision regarding whether to regulate power plants because it can consider cost when deciding on the extent of regulation. The Court rejected this argument, finding that “[c]ost may become relevant again at a later stage of the regulatory process, but that possibility does not establish its irrelevance at this stage.” The majority found that cost must be considered, but went on to say that it is within the agency’s discretion to consider how to evaluate costs, and even what constitutes a “cost.” The Court stated that cost “includes more than the expense of complying with regulations; any disadvantage could be termed a cost.”

--Kathryn Oehlschlager

For more information, contact Kathryn Oehlschlager at klo@bcltlaw.com or (415) 228-5458.

EPA Proposes Elimination of ASTM Phase I ESA Standard E1527-05 from CERCLA All Appropriate Inquiries Rule

The EPA has announced a proposal to amend the “All Appropriate Inquiries Rule” for conducting environmental site investigations of potentially contaminated property. The proposed amendment will eliminate ASTM E1527-05 (“Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process”) as an acceptable standard for undertaking “all appropriate inquiries” necessary to qualify for certain liability protections under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA).

The All Appropriate Inquiries Rule, 40 CFR part 312 (“AAI Rule”), outlines environmental investigations and inquiries that prospective property purchasers must undertake to qualify for certain liability protections under CERCLA, including the bona fide prospective purchaser defense, contiguous property owner defense, and innocent landowner defense. The requirements also apply to recipients of certain EPA grant funds. In 2005, the AAI Rule recognized a standard published by ASTM International, ASTM E1527-05, as a standard that satisfies these requirements.

In December 2013, the EPA published a final rule that formally identified the recently published ASTM E1527-13 as another acceptable standard. ASTM E1527-13 updated ASTM E1527-05 by, among other things,

• clarifying and redefining certain key terms, such as “recognized environmental conditions” (or “RECs”), “historical RECs,” and “controlled RECs,” 
• explicitly recognizing that potential vapor migration and releases must be considered, and
• providing additional guidance relating to regulatory agency file and records review.

When EPA formally incorporated the updated ASTM E1527-13 standard into the AAI Rule in December 2013, the agency stated that it “strongly encourages prospective purchasers of real property to use the updated ASTM E1527-13 standard when conducting all appropriate inquiries.” However, EPA chose not to eliminate reference to the 2005 standard altogether, at that time. 

By now removing reference to ASTM E1527-05 from the AAI Rule, EPA hopes to “reduce any confusion associated with the regulatory reference to a historical standard that is no longer recognized by its own promulgating organization as meeting its standards for good customary business practice,” and to “promote the use of the standard currently recognized by ASTM International . . . .”   

EPA is proposing that the effective date for removal of the reference to ASTM E1527-05 be one year following publication of the final rule, “to provide parties with an adequate opportunity to complete AAI investigations that may be ongoing and to become familiar with the updated industry standard (ASTM E1527-13).”

A separate ASTM standard identified in the AAI Rule for “Forestland or Rural Property” (ASTM E2247-08) is unaffected by today’s proposed rule.

 

--Don Sobelman and Nicole Martin

For more information, contact Donald Sobelman at (415) 228-5456, des@bcltlaw.com, or Nicole Martin at (415) 228-5435, nmm@bcltlaw.com.

Agencies Extend Comment Period for “Waters of the United States” Proposed Rule

Having received over 60,000 comments already, the U.S. Environmental Protection Agency and U.S. Army Corps of Engineers have extended the comment period for their proposed rule defining “waters of the United States.” The proposed rule would redefine what types of waters are subject to regulation under the Clean Water Act. The proposed rule was published in the Federal Register on April 21, 2014 and, as Barg Coffin attorneys predicted, has received a flood of interest. Stakeholders now have until October  20, 2014 to submit comments. 

-- Estie Kus

For more information, contact Estie Kus at (415) 228-5463 or emk@bcltlaw.com.

D.C. Circuit Upholds Most of Portland Cement MACT, Vacates “Unavoidable Malfunction” Defense

In a unanimous ruling issued earlier today, the D.C. Circuit largely upheld EPA regulations governing emissions of toxic air pollutants from Portland cement plants, while vacating a provision that created an affirmative defense for “unavoidable” equipment malfunctions.

The regulations, issued in February 2013, set limits for emissions of particulate matter, mercury, hydrochloric acid, and hydrocarbons from Portland cement manufacturing facilities. 

In rejecting several arguments advanced by environmental organizations challenging the regulations, the court held that EPA reasonably interpreted the Clean Air Act to allow the Agency to consider compliance costs in setting “beyond-the-floor” MACT limits for toxic air pollutants.  The court also rejected the argument that Section 112(d)(7) of the Clean Air Act should be interpreted as an anti-backsliding provision and held that EPA acted reasonably in extending the compliance date for all pollutants covered by the regulations when it revised the standard for particulate matter in the 2013 rule.

However, the court concluded that the creation of an affirmative defense for “unavoidable” equipment malfunctions exceeded EPA’s statutory authority.

The lead case is Natural Resources Defense Counsel v. EPA, Case No. 10-1371.

--Chris Jensen

For more information, contact Chris Jensen at cdj@bcltlaw.com, or (415) 228-5411.

D.C. Circuit Upholds Power Plant Mercury and Air Toxics Standards

The D.C. Circuit has upheld a 2012 EPA rule limiting air toxics emissions from coal- and oil-fired power plants.  The rule, commonly known as the Mercury and Air Toxics Standards, or “MATS,” requires new and existing coal- and oil-fired power plants to reduce emissions of mercury, arsenic, chromium, and other toxic air pollutants.

In a 2-1 decision, the D.C. Circuit rejected a variety of challenges from industry and environmental groups, including a challenge to EPA’s conclusion that it was not required to consider costs in determining whether regulation of electric utilities is “appropriate and necessary” under Clean Air Act § 112(n)(1)(A).  While acknowledging that cost of compliance plays an explicit role in setting “beyond-the-floor” MACT standards and indirectly influences the determination of MACT floors, the majority deferred to the EPA’s determination that it is reasonable to make the initial decision to list the utilities as sources of hazardous air pollutants without taking cost into consideration.

In his dissenting opinion, Judge Kavanaugh argued that the term “appropriate” necessarily implied that costs should be taken into account in making the listing decision, citing EPA’s own regulatory impact analysis, which estimated the cost of implementing the rule at $9.6 billion.

The lead case is White Stallion Energy Center, LLC v. U.S. Environmental Protection Agency, D.C. Circuit Case No. 12-1100.

-- Chris Jensen

For more information, please contact Chris Jensen at cdj@bcltlaw.com or (415) 228-5411.